A company exempt from VAT UK registration and exceeding the registration threshold

The LTD company only sells services exempt from UK VAT (financial services) but has exceeded the registration threshold because the company has a large number of reverse charge purchase invoices. In this case, if all sales are exempt from UK VAT, should the company register for UK VAT? Thank you in advance

Hi,

Yes you would need to register please refer to section 5.7

Place of supply of services (VAT Notice 741A)

Thank you.
 

Hi, Thank you for your answer. However, on the website: https://www.gov.uk/government/publications/vat-notice-7001-should-i-be-registered-for-vat/vat-notice-7001-should-i-be-registered-for-vat#basic-principles In 2.6 I see that "If all your supplies are exempt, you will not be able to register for VAT." Should the company still register for VAT GB?

Hi,
Although all of your supplies are exempt there will still be a requirment to register for VAT in the UK if the reverse charges go over the VAT Registration threshold.
The guidance states:
If you belong in the UK but are not already UK VAT registered and you receive supplies of B2B general rule services from overseas suppliers (that are treated as supplied where the recipient belongs), the value of those supplies must be added to the value of your own taxable supplies when determining whether you should be registered for UK VAT. Even if you make no taxable supplies yourself you may still be required to register if the value of general rule services received from overseas suppliers exceeds the registration thresholds.
Place of supply of services (VAT Notice 741A)
Thank you.

Hi, Thank you for your answer. I have one more question about this. If a company that only sells VAT exempt services registers for VAT UK and receives a reverse charge invoice, will they have to pay VAT to HMRC and will not be able to deduct VAT as standard?

Hi. That would be correct. There would be a requirement to account for the output tax within the reverse charge but then they would be unable to deduct the VAT as  input tax as this would be relating to exempt supplies  . Thank you .